Let me issue and control a nation's money supply and I care not who writes the laws. Mayer Amschel Rothschild

"Cowardice asks the question, 'Is it safe?' Expediency asks the question, 'Is it politic?' Vanity asks the question, 'Is it popular?' But, conscience asks the question, 'Is it right?' And there comes a time when one must take a position that is neither safe, nor politic, nor popular but one must take it because one's conscience tells one that it is right."
Martin Luther King, Jr.

The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or evade it, rather than to reveal it. - John Kenneth Galbraith

The
Grip of Death
A Study of Modern Money, Debt Slavery and Destructive Economics (Paperback)
by Michael Rowbotham

All this will not be finished in the first 100 days. Nor will it be finished in the first 1,000 days, nor in the life of this administration, nor even perhaps in our lifetimes on this planet. But let us begin.
-JFK

Chapter 2: Banketeering - The Money Supply and Related Scams

(Note - this short essay is written about Canada, but the same general ideas apply to every modern western democracy with a 'modern' banking system - the details may vary, but the underlying process and results are the same everywhere)

In Canada, people believe that their government creates the money they use. The details of how much there is, or how it gets from 'creation' to circulation are fuzzy at best, no questions asked no answers provided - it's just something we have and use every day in our communities and country. We get 'our' money from working and when people have good enough jobs that they don't spend every cent of the paycheque every week, they save their extra money, most commonly through bank deposits. Banks then loan out some of the accumulated deposits to other people or businesses who want a loan for whatever reason, and make their profits through the interest differential between the deposit and loan interest rates. There's the stock markets and things, but that's not really stuff that Averagejoejane pay much attention to.

Beyond that basic story, few Canadians ever question things about money or economics - actually, they are pretty much encouraged NOT to ask much about economics, beyond learning to balance their chequebook (which seems to be a task beyond most people, considering all the joking about it), or stashing some money in a retirement plan because you don't expect anyone else to look after when you're too old to work in this society, do you? The subject is invariably presented as something the common citizen should recognize as serious to the life of the country, but the details of which are something very difficult that only eggheads and university trained people and business reporters can understand. All that economics stuff is also, like, pretty booooring with lots of really difficult mathematics and models and equations with lots of letters and stuff that we all learn to hate in school, and since it's being well looked after by others, we 'normal people with better things to do' can just spend our weekends at the mall and watching Hot Babes on Sandy Beaches on tv and bungee jumping and doing all the fun stuff we like to do that's available for us in modern Canada in our spare time. But that's ok, really, actually knowing anything about economics, and making decisions about economic policy, is a serious and complicated business, not for average citizens to worry about, but is best left exclusively in the hands of Economists and Bankers and Finance Ministers and Investment Counselors and Economic Analysts and Business Commentators, guided by business organisations like the CCC or CCCE or CBC (that's not the news people, it's the Conference Board of Canada) or the Fraser Institute, whom we can all place our trust in to do the right thing for us all, according to themselves and the Canadian mainstream media and anyone you might talk to in the Canadian education system.

Anyway, all Mr/Ms Average Citizen really knows or needs to know about economics is that it is about money, and they need money to survive in our society, the more of it you have the better, and you get it by working. Some lucky people are born rich and don't worry about it, but most people have to. Economically speaking, we all know, Canada is a pretty good place to be for most people, so there's not much point in complaining about anything, it don't get much better jack.

Mmmmhmmmm.

Although this little civics book scenario has elements of truth, like any great and successful scam it presents a happy little picture, but one that is far from the 'whole' truth, and uses that picture to conceal some much larger and much, MUCH less pleasant truths. The 'good' truth here is that Canada was at one time a reasonably well run democracy, trying to be progressive and create a good country for all its people, with a monetary system carefully administered by responsible people looking out for the best interests of Canadians - and the rather ugly truth in this case is that during the 1970s the Canadian monetary system was transformed into a huge scam designed to essentially steal tens of billions of dollars from Canadians every year - as much as a couple of Trillion dollars since the mid-70s when it got seriously underway - and a lot of other ugly things started growing from that beginning as well.

Yea, you can read that again. A couple of trillion dollars have been stolen from the Canadian people, through the scam of the monetary supply system in Canada. It's the wake up call. And it's true.

I know that's a pretty serious allegation, but when you understand the facts, and the history as it does not appear in CBC 'in-depth' features or on government websites or in the sanitized 'history' course you get in school, it's not really deniable. And once you finish this, I think you're going to be understanding some pretty high-up people in our country have been lying to you for quite a while too. And stealing a LOT of money. There's just nowhere else to go once you understand some things they've been pretty careful to see that you never learned about before.

Details
The first and biggest and most important truth they are hiding here, that they never tell you about the Canadian money supply system, from which everything else in the multi-layered scam arises like a cancer spreading to every organ and system in the body, is one very simple fact - the government of Canada actually creates only about 1-2% of the money supply of Canada through the bank notes and coins that most people use every day, the stuff you get from the ATM machine and pay for your Tim Horton's double-double with. The rest of the money in Canada - about 98% - is created by private banks from, essentially, thin air, in the form of loans - they accept an application, type some numbers into their computer, and voila, new 'money'. And of course on all that money they create as loans, they charge interest, as banks do. And not just once, but year after year after year.

Yea, don't rush on, let that sink in for a minute. 98% of the Canadian money supply is created by private banks, as loans. And they get paid money on all of that. Private banks get paid interest on 98% of the Canadian money supply. Every year.

Bet you didn't know that before. Few people do. For some reason neither the gov, nor the banks, nor the business commentators at the CBC, seem to think that is important enough to be telling people.

This fact - that most of 'our' money in Canada is created through bank 'loans' for which the banks then collect interest - is the basis of every single economic problem we have in the country. And a lot of other problems that are related to money, here and worldwide (it's not just a Canada scam) or things that are done with money, or not having enough of it.

This sounds a bit shocking at first, or maybe more than a bit shocking, but you can verify it easily enough yourself with a bit of looking around. First, the total amount of Canadian currency (real Cdn bank notes authorised and supplied by the Cdn gov via the Cdn mint, plus a smaller amount of coins - what you have in your wallet and use every day) in circulation is about $50 billion - an exact 'authorised' figure is hard to find, but these two non-conspiracy-theory sources give figures indicating the same ballpark - Taxtips.ca (question 1, about half way through - 40 billion) and Bank of Canada Fact Sheets - Seigniorage Revenue (last para, 35 billion 'in recent years' - prior to 2001). And second, three other interesting figures that are well enough known or could be but nobody ever connects any dots, at least in the mainstream media - we all know the 'national debt' is around $500 billion, and consumer debt is around a trillion (Where Does the Money Go: The Increasing Reliance on Household Debt in Canada (from the CGA, Certified General Accountants of Canada, probably reliable non-conspiracy theory data); and finally, as a major figure, I can't be bothered doing the googling and hunting on a slow line, but provincial and municipal debt is at least another $500 billion - just have a look yourself if you're curious at provincial budgets and check out the debt figures. And I suspect you can then see that it would take some doing using the mythological scenario of 'loaning out your 'real money' deposits' to turn ~50 billion in currency or coins provided by the Cdn gov into 2 trillion dollars in loans. And I suspect even that quite awesome figure is actually lowballing things quite a lot, as you might note there is no mention of business loans - they don't get all their money from stock markets by a long shot - but this is a big picture kind of essay and getting lost in details is not necessary and even counterproductive - if you spend all your time arguing about whether to go right or left around every pothole in the road, you'll never get to the end of it where the real candy awaits.

Let's flesh out a few details, now that the bones of this absolutely monstrous scam (and that is not hyperbole and I am not exaggerating - wait and see) have been laid bare on the table.

1. Most importantly is simply this: Why would a sovereign people, i.e. the People of Canada, in a country that is theoretically at least 'their' democracy collectively, allow private individuals (for that is all banks are, a group of investors, otherwise 'private citizens') to create the great bulk of their money supply through interest-demanding loans that the people 'borrow' into circulation? What is 'our' government doing giving private individuals that power, and essentially in secret, as there has never been any sort of public debate over this issue nor is there any widespread awareness and acceptance of the few simple facts I offer above? Well-regulated banks certainly have a role in an (also well-regulated) democratic market economy, but allowing them to create almost all of the national money supply as interest-bearing debt is very obviously as detrimental to the economic wellbeing of a sovereign country as it is a golden cash cow to those given this amazing privilege (if why it is very, very detrimental is not obvious to you right away - I understand they don't teach you this in school nor talk about it on Business Digest and actually encourage you not to think about such things at all - well, read on, and find what they don't explain to you (quite a lot, you will see)... ).

2. Those who support the current system of banks creating money, when confronted with someone who thinks there may be something wrong with the system and asked to explain why our government doesn't create the money supply instead, explain somewhat condescendingly that governments creating money is terribly, terribly irresponsible and the world would surely end practically overnight through horrible inflationary forces were such a tragedy ever to be allowed to happen - billions of dollars for a loaf of bread oh horrors!! As an example of this, note the small note here from the Government of Canada's 'civics book economics primer for slow 8-year-olds' to try to keep you from thinking about things you actually *should* be thinking about, as I explain herein - 4. Why doesn't the Bank of Canada just print enough money to pay off the national debt? - and after you have a look, you might have a question of your own, that nobody will answer, at least on 'their' side 'Ah - but what if it wasn't the government 'creating money' in great gobs in addition to the bank-created money, but instead of????'. Every scam artist, big and small, in history protests that they are doing the best thing for everyone!!! and tries to steer the suspicious mark away from true in-depth analysis of anything - and this deflection of very honest questions is nothing more than an attempt to keep people away from understanding things that would put their little (that is to say, very big) scam in serious jeopardy.

Let's try and put a lid on this very false idea once and for all. Their premise seems to be that very irresponsible and/or stupid people run the government, but bankers are ever so clever and responsible. (little alarm lights ought to be flashing already at that last idea, if you've been paying any attention at all to what banks have been doing the last 20 years)

If we take a brief look at the financial history of our country, we can find clearly demonstrated the hugeness and brazenness of the lie of governments creating money as 'terribly irresponsible' and banks being somehow the epitome of responsibility - and the perversity of this lie as well, because it is actually quite demonstrably the reverse situation, it is banks themselves who are terribly irresponsible (or worse) when entrusted with something as important as the creation and management of a nation's money supply. (note, although I will direct you to a few interesting places, I'll leave you to google up most of any corroborating info yourself - most is available in various places, and that way you can't accuse me of steering you to 'conspiracy theory' places (but you might note that this whole chapter is indeed the story of a huge conspiracy, and, as you will come to see, there's nothing 'theoretical' about it...)

We all know of, or should, although I understand what passes for 'education' these days is getting distressingly shallow, the great financial crash of 1929, which led to the Great Depression of the 30s. This crash was caused by the pretty much unregulated banks of the time acting extremely irresponsibly (with various other high-level financial players, of course) in various ways, and as the dust from this shattering event began to settle, the Bank of Canada was created in 1934 with the major purpose of trying to stabilise Canada's money supply and establish some regulations to control the excesses of the banks in Canada. And they did so quite well, and from then through the early 1970s the Bank of Canada kept a pretty tight watch on banks and other financial institutions, and created, through interest-free loans to itself, a considerable amount of the Canadian money supply, financing, for instance, a substantial part of the great Canadian effort in WWII, and the social growth of our country following that horrendous event, with the pensions and health care and UI and education and other infrastructure development and social programs that made Canada one of the most prosperous and leading social democracies in the world by the 1970s, admired by people around all of the world. During this period the government also borrowed some money from private banks which were still creating some of the money supply too, as they always had - but following 1934 and the creation of the Bank of Canada, until the mid-70s, the government kept a close watch on the private money creation to ensure the banks did not get out of control as they had in earlier times. During that period, mid-30s to the early 1970s, with this system of managing the money in Canada, even after huge war debts being created and paid back and massive development of the Canadian infrastructure both socially and physically, the Canadian gov debt stood at a very low level in relation to government income and the Canadian economy, the interest on which was nothing more than a small item in the national budget (check out a couple of short films by a guy called Bill Abram on this history - very interesting. Also, you might look at App 2 The Corporate Reactionary Revolution now for a bit of useful background about this period and the leadin to what follows from a broader perspective. If you are into this kind of thing, and want better understanding of this stuff, you need to delve into American history a bit here as well, and the story of the American (privately owned, misleadingly named) 'Federal' Reserve, established in 1913 or 14 - and go deeper, much deeper, than the thoroughly sanitized 'official version' (of this or anything else) - you might try starting with a book called The Creature from Jekyll Island, a bit off the far-right wall in interpretation of some of the facts, as they tend to be about everything, but it does tell the general story more or less accurately with a lot of other interesting stuff. You will NOT find any of this stuff on the CBC's 'in depth' reports or websites of the Gov of Canada or Cdn banks or any congruent American official sites, but it helps considerably in understanding the Cdn situation to be aware of such things. Stuff you will never, never, never see on the CBC or the rest of the Canadian media, which brags about its freedom often enough, but doesn't care to talk about 'responsibility' as the word applies to them and telling Canadians important things like I talk about here. None of the really good stuff gets on the CBC. Or taught at university anymore. Grok that as you're going through this stuff too. It's important, very important - either the media are being scammed by these people, as are most Canadians - or they're part of the scam. Your reaction to that idea will give you an idea of how much work you still need to do to get out of the box....)

So without getting into a lot of historical details, the point of that little discussion was so that we can see that from the mid-30s and the creation of the Bank of Canada, through the early 70s, once we got back on our feet after the banks-engineered 29 crash and subsequent depression, the government of Canada was doing an exemplary job of responsible handling of the Canadian finances, in every way. It is pretty difficult to make any argument otherwise. And during this period they were creating a good chunk of the Canadian money supply through the Bank of Canada, financing all of that development, and the country did not come crashing down around our ears in a financial tsunami because of it. Ask those who tell you that governments creating money is about the worst thing that could ever be done, and is terribly irresponsible, to comment on this, and the amount of development that had been done through this money creation, and the excellent shape of the country's books ~1970, just before you ask the next question which you will have after reading about the big scam I am talking about began in earnest.

But then, in the mid-70s 'our' government decided to no longer use the Bank of Canada for at least some of their own governmental needs, and looking at our financial history from that time until the present, and comparing it with the previous 40 years, you couldn't ask for a much better demonstration of gross irresponsibility in the handling of the nation's money supply by government allowing private banks to create it all, outside of the trifling amount of actual 'legal tender' currency. (Defenders of the current system will try to stop you here, and protest that world conditions were responsible for what happened then and has happened since, and to some extent that is true - the same things as I describe in App 2 The Corporate Reactionary Revolution were taking place all over the western world - but Canada could have stood tall and been the good guy and fought this corporate/bank takeover instead of embracing it. There is always argument to be made about what was right to do at the time and in the world conditions, but that the government of that time did give in to the corporate and bank demands, leading to the problems I describe, while they most assuredly had other choices available, and choices that would have been far, far better for the people of Canada, as I show here, is not debatable. Nor is the fact that they kept, and continue to keep, most of this history that I talk about here essentially secret from the Canadian people, which is not a sign of innocent behavior....).

Back to the main story.

In the short 30-year period since the mid-70s when all this began, the Canadian banks, deregulated almost completely by the early 90s, creating money to all intents and purposes at will, and speculating it all away in the most irresponsible way imaginable (check a Cdn website called COMER for some very interesting reading about our banks and what they have been up to), have required two major bailouts (no bailouts from 35-75), engineered at least two major recessions (nor recessions from 45-75 after we got out of the big 30s one), and driven several financial bubbles (nor any of these) by creating way too much money, bubbles which burst as bubbles inevitably do with the inevitable retractions of the economy and sufferings of average people losing jobs, savings, homes, retirement plans, etc. On their own part, within ten years of turning the money-creation business entirely over to private banks, our government had gone from a modest, easily manageable national debt into a massive national debt to the tune of a half trillion dollars, with 'interest' payments becoming (and they still are) the single major item in the national accounts, ranging from $30-50 billion per year (double that by counting provincial/municipal debt) and causing considerable hardship because of it with major cutbacks to social programs and seriously lapsing infrastructure maintenance, repercussions which are felt to this day in many ways, for instance the ongoing angst about not enough doctors or hospital beds. And to make it even worse, most of that debt was just accumulating interest combined with borrowed money to pay interest on money borrowed earlier, one of the serious red flags of grossly irresponsible money handling, a complete abandonment and even betrayal of the fiduciary responsibility of the government to the people of Canada to look after their financial affairs in the best way possible. And the second bank bailout, in the early 1990s, came even after several years of the banks receiving windfall payouts from the government, in interest on the national debt the government quite intentionally arranged for them, of $40 Billion dollars per year and more (and double that if you add in provincial etc debt)! (there's a more detailed explanation of this in App 1 The Great National Debt Scam).

This behaviour since the great banketeering scam got underway in the mid-70s, by both government and banks, has been very demonstrably about as 'responsible' as the worst VGT addict gambling away the paycheque every Friday, then telling his family the cupboard was bare while going to cheque cashing companies and loan sharks and getting deeper and deeper and deeper into debt.

So when you consider these two periods, and compare them - well, let's just not hear any more from the 'government printing money is soooo irresponsible!!!!!' gang, ever again, please. It's just too much of a blatant and brazen lie, with the very opposite so demonstrably the actual case. (as a sort of last gasp the proponents of the 'government printing money bad!!' notion will bring up the only actual cases there are of such things, such as Germany in the 1920s or one or two others, but the situations in these cases were nothing whatsoever like the situation in Canada today, and of no more credibility than saying something like Hitler was a bad man so all Germans must be too. Leave them and their lastgasp arguments to wither in the sun, pay them no more attention)

(A kind of sarcastic caveat (often a lot of truth to be found in sarcasm) - it does depend on who you are being responsible to, of course, whether you call the above noted activities of 'our' government 'responsible' or not. If the government was supposed to be being fiduciarilly responsible to the people of Canada, it of course failed miserably and we've been paying the price ever since they turned full money creation powers over to private banks, deregulated them, and managed to run up that huge debt. But if they were actually being responsible to someone else, behind the scenes as it were, doing what they did for reasons never talked about in public, then the turning over of the money creation power to the banks, with the transfer of a couple of trillion dollars of taxpayer money to certain 'investors', with the attendant gutting of the Canadian social and physical infrastructure and all of the other pro-business, anti-worker changes made to facilitate the ascendancy of 'market-based fundamentals' a la the Friedman/Chicago 'school of economics' over the same time period - then all of these things could be interpreted as carrying out their 'true' responsibilities to their actual masters very ably indeed. I leave it to the reader to wander through those ideas alone a bit. If you're ready to get out of the box, it shouldn't present much of a challenge.)

3. A few words on exactly why letting privately-owned banks create most of our money supply is such a bad idea.

3a: Interest = Real Property
When thinking about why it is a bad idea to allow private banks to create most of our money as interest-bearing debt, the first question one needs to consider is simply - where does the interest come from?

The answer to this simple question is as revealing of what is happening here Mr Jones as the answer to the first question I asked in this essay (where does the money come from?, if you're getting confused already) - and as important. (you can kind of tell how important some things are by the exposure they get on the CBC or in other major media - this is very, very important stuff, and you will never, never, never hear their business commentators talking about it, or find any discussion of it checking around their ludicrously named 'in-depth' reports, which might better be labelled something like 'what good children believe if they want a pat on the head' reports).

The thing, the very BIG thing, is - if banks are the only entities creating the 'non-government-created-bank notes' computer-entry-money in Canada, and they create 98% of the nation's money supply by lending it to people, and they expect interest on that money at the end of the year - where is the interest coming from????

Think on this a bit too. It becomes a growth experience, and I'm not talking about bank profits. Well, I am, but from the other perspective.

If the banks were doing as the civics school dogma wants you to believe - taking real, already existing government-created money from existing deposits, and loaning some of that money out as a business, and charging interest as their profit - that would be acceptable, providing a certain useful business service to the community and country. But when the banks **create** XXX dollars essentially out of thin air, and the money they thus create comprises the great bulk of the nation's actual money supply, and then require XXX + Y dollars when you pay back the loan - where does Y come from? There is the supply of 'real' government created 'legal tender' bank notes circulating, of course, but there's not enough of that to cover more than a fraction of all the interest required (even if it could all be gathered in one place, a highly unlikely idea since it circulates daily a few bucks at a time amongst tens of millions of people and businesses) - since the mid-80s when the national debt reached the level they apparently wanted it at (since it's been around there since then, sucking a regular 30-40 billion bucks from us to the banks/'investors' every year, about as gold-plated an 'investment' as you could imagine), all the circulating cash money would barely cover a year's interest on the national debt alone without even getting at the interest due on the provincial debts or consumer debt.

So what are we going to do about that interest? The Canadian economy is, of course, a huge and complex system with hundreds of billions of dollars circulating every year and tens of millions of users large and small, private and business, interacting also with other countries around the world and reaching over years of time, and there is a lot of room to shuffle the couple of trillion dollars of bank-created debt-money around between Peter's and Paula's and Tom Biznessman's accounts to a certain extent, and there's always many loans being paid off and many more being created each year, often as 'rollover' or including new loans specifically to pay interest on an existing debt, which meets some of that interest requirement - but at some point in time (actually many, many points, ongoing), like a game of musical chairs, some careless or unlucky schmucks will find there is no bank-created money anywhere for them to shuffle or access to pay to the bank, and then what?

Well, every serious loan of course requires collateral - real property of some sort. When the money can't be found - there goes the real property. And when you stand back from the middle of the daily forest of millions of tiny daily transactions, and look at the big picture from somewhere high over the side of the box all these transactions are happening in, you can see that over time, in return for being allowed to create that huge amount of money, 98% of the entire nation's money supply, and demand interest on it and collect the collateral when the interest cannot be found, the bank owners are going to start picking up a lot of real property in lieu of that interest that cannot be paid. Every year that game of musical 'where's the interest ohoh!!?!?' chairs claims many, many victims, every year interest is due, every year a significant amount of it has to be paid in real property because the banks created the loan money but not the interest money they demand on top of the loan. (It gets even more perverse when you figure how many loans owed (such as most of the federal national debt) were and are simply money borrowed to pay interest that could not be found elsewhere - they'll let you do that for awhile, making the eventual property grab that much larger).

Think of it - for being granted the right to create the Canadian money supply out of thin air, and charging interest on it (and even making loans for no other purpose than to cover due interest!!) - they get real property in return. Much real property. On top of the massive amounts of interest they get for creating money out of thin air (quite a good chunk on a couple of trillion dollars each year), and the 'service' charges that keep increasing as do bank profits. Business opps don't get much better than that, I would think. Although modern capitalists are quite creative with the ways they have of making us work while they get rich off that work, but that's stuff for another chapter.

This 'we'll take your property if you can't pay us!' is not a new banking game since the 70s, of course, and has been going on as long as we have had banks, but it just kind of went on steroids since the 70s, after 40 years of careful regulation, when the government turned over its money-creation Bank of Canada function to the private banks, and removed what had been a certain balance between interest-demanding money and non-interest-demanding money circulating. And when the government started borrowing their own money, and thus putting government property into the 'collateral' kitty once-removed, things really started getting out of control as governments began to sell 'our' property to make up income shortages (just as a little self-study exercise in helping to understand all this, try to make a little list of government properties that have been sold off over the last 30 years, usually at far below market value, whether in the name of privatisation or getting rid of services deemed 'unnecessary' by business groups or rightwing politicians or whatever, but always with at least the partial justification of 'making money to pay down that darn ol debt!' (which oddly enough doesn't seem to ever get paid down much no matter how much they claim to throw at it). Think of big things like CN and Petrocan and Ontario Hydro, and start working your way through a long list. Think about how much YOU were consulted about the selling of YOUR property. Get one of Mel Hurtig's recent books (the one coming in May/08 sounds like the scariest of all) for stuff on this and a lot more. Get more than one sheet of paper. Get whatever chemicals you need when your temper starts getting out of control and you get a strong feeling you want to really hit someone. Get determined to do something about this.).

3B: The other "I" word:
Deregulating these banks at the same time as letting them create almost all of the nation's money supply out of thin air and collect interest from those who do the borrowing of that newly created money makes inflation completely inevitable.

How can it not? The people who use the borrowed money in their businesses have a choice to make - they can either reduce their profits each year by the money they pay in 'service charges' on that borrowed money (and you can imagine how that idea would go over with today's 'investors'), or they can increase their costs to cover the interest - and businesses don't stay in business long if their profits keep falling. Every year, 98% of the Canadian money supply must have interest paid on it. Aside from causing great bank profits, that interest causes inflation - how can it not!?! Even if you personally do not have a business loan to pay interest on, you will be dealing with many people who do have such loans, and when those people increase their prices, you must increase yours as well, if you are a business, or see your profits fall, and fall, and fall, as you meet the rising demands, year after year, of others to cover their interest. There is no escape. That's how inflation works its way through an economy - sort of like the falling domino idea.

If you are a common wage-earning working person, of course, as are most of us, your salary does not go up as much as inflation rises year after year after year, so you fall behind - everyone knows how employers resist giving employees raises, it's just one of the givens of modern life (it's another lie of the scammers that unions demanding raises creates inflation - there may be the odd instance in the past to point to of a powerful union managing a raise over cost increases, but in the big picture of all workers, and especially in the globalised 'race to the bottom' de-unionised world of the 21st century, no freaking way, as they say). Banks that charge interest, and businesses that raise their prices each year, keep up with inflation, and even get ahead of it (inflation 3% cost increase 5% - you see it everywhere, adding to the basic inflationary pressure caused by a bank-created, interest-demanding money supply) - but the income of most working people always lags behind. And lags more and more each year. You know it - since this got underway in the 70s, every year your money does not buy as much as it used to, your savings account is smaller every year, the credit card bills get bigger and bigger as you just try to stay even, let alone think about getting ahead - while the banks brag about bigger and bigger profits every year, year after year, every quarter these days, and a business without constantly rising profits will not be in business long. After 30 years of this (sooner, really, these big repercussions started being seriously felt in the 80s and escalated through the 90s and the first years of this century), most families need two adults working now to even think of a comfortable middle class sort of life, whereas prior to the advent of the current situation in the 70s as I describe here and elsewhere, most families could have a decent life with only one working person.

Which, again, is a direct result of letting the banks create almost all of our money, without anything more than the most nominal government supervision.

But is there a better way?? Banks creating money may seem to be a bad idea as you explain it here, but what can we do to replace this system? We do seem prosperous enough as a country, and the system of bank-created money and capitalism, problems though there are, certainly seems to have been instrumental in the creation of our great technologically advanced world and prosperous and still pretty free western democracies??? So - if banks don't create money, where does it come from??

Re our great and prosperous technological society and freedom - this debate could go on a long time, and I'm not getting into it here - the whole book is about that, in many ways, and I do look at this in a bit more length in the final couple of chapters - but the distaff side of that argument is simply that insofar as our society is so great and free, it is in spite of capitalism and the modern banking system, not because of it (the people running this place lie about the money, and they lie about a lot of other things such as how wonderful their society is too - there are some good things certainly, but there are also many very bad things such as the control of the money supply I talk about here that they do NOT talk about at all that need to be considered in any equation talking about how good all of this *really* is). And I might also note that it is pretty obviously because of the banking/money system we have allowed to be imposed upon us, as I describe above, that the freedom and prosperity and security of the average citizen we enjoyed before this modern era began in the 70s are now very much being rolled back in a major way through bank-created money-creation and inflation and other problems related to the cancer-like capitalist growth imperative; you know how they impact you and everyone else in a considerably non-wonderful way, and the considerably non-wonderful pressures most people face daily from money problems. Imagine a human body - a complex and wonderful thing. Then a cancer strikes, secretly turning the cells and organs in your body into being used against you rather than for you. The human body is still an amazing and beautiful thing, even in its weakened state - but what a much more wonderful and beautiful thing it returns to after you realise that illness is there and get rid of it. Capitalism, which is what all of this banking stuff is about, is nothing more than a cancer infesting our body politic, a cancer which has now metastasized into every corner of our society, causing death and destruction and disease everywhere its influence is felt - and we all will be far, far, far better off once we understand this cancer and ban it from our presence forever.

But about the money creation, the subject of this chapter - Is there a better way? Of course there is, and a blindingly obvious one, as are most truths once the curtain they have been concealed behind is drawn back and they enter the public consciousness - We the People create our own money through *our* government - and issue it debt-free. No interest required every year on *our* money that is circulating in *our* country, paid to private individuals who alone operate and control a highly, highly lucrative for them (and cancerous for us) money-creation cash cow. This very idea, of course, is what the bankers fear most, the death blow to their great privilege as it were, which is why they are so determined to make everyone believe 'Governments creating money must not be allowed!!!' - their safety lies in having that false belief be so strong in your brain that if it is ever raised you reject it without even thinking about it. So far they have been quite successful. I hope this little essay can help change that.

Consider our current system. Currently, as I noted earlier, with the bank-created debt-as-money-supply system, we have a more-or-less set amount of money - the bank notes and coins - of about $50 billion, and then another 2-3 Trillion on top of that that the banks create as loans, all that huge pool endlessly demanding more money be found for its 'interest'. This huge pool of bank-created credit money is constantly coming and going - as loans get paid off, the money disappears from the computers, but as new loans are made there is new money added to the computer pool. With populations and economies growing, the trend of course is creating more new loans than there are old loans being paid off, so the money supply expands with time - but the control of this interest-bearing money creation in the hands of secretive banks whose primary objective is maxing their own profits leads to all the problems discussed earlier. And also, with that huge amount of floating loan money constantly appearing and disappearing in bank computers there can be no decent oversight even if the government was so inclined, and abuses and excesses are inevitable when the people in charge of it are much more concerned with maxing their own profit in any way possible than in maintaining a stable money supply for the people of the country, as we have seen over and over again the last 30 years since the banks were once again freed from serious government oversight. Or as we also see at other times, when some of the high players get too clever with their games, added to the out-of-control money creation, and the latest speculative pyramid they have built together crashes down, as they do every decade or so, then the short-sighted 'must have bigbig profit this quarter!!' banks and their investors retreat a bit to protect themselves, and get over-cautious about making new loans for awhile, leading to a contraction of the money supply, and we get a recession (and let their loot accumulate - the property others are losing because of the recession, as long as they control things they run a 'heads I win tails you lose' sort of game). There are many other problems I am sure you can think of as well - I am not trying to provide an exhaustive list here, just examples.

But consider what might happen if this was the other way around - our government and not private individuals controlled our money supply, with, say, for instance, 80-90% of the money supply fixed - that is to say, not created-out-of-thin-air as debt that would disappear when it was paid back, but living 'forever' in our government-controlled computers, ebbing and flowing here and there between various accounts as our daily transactions dictated, but never disappearing, and not demanding interest from someone every year - and only a sort of buffer zone of perhaps 10-20% of the money supply comprised of floating, create-uncreate loans (with some fairly strict guidelines on how much new money was created, and for what purpose, to avoid inflation and crazy speculation). In such a situation, such things as speculative inflation from secretive banks creating too much money, or collaborating with other big time financiers and creating hedge fund or subprime crises, or recession because they created too little, would be virtually impossible. (People should be free to speculate with stocks or gamble in any way they please, of course, but only with their own money, and not with the collusion of bank 'investors' also looking for windfall profits, endangering the stability of the national money supply by creating huge amounts of money for nothing more than gambling.)

Fiat money? Gold-based money? What to replace Bank 'Money'?
Many people rail at length against 'fiat money', and say that a 'return to the gold standard' is the only way to have a stable money supply.

I seriously disagree with all of that.

Consider:
1. Their basic argument is that governments creating money is terribly irresponsible, they just print huge scads of bills and destroy the value of everything through hyperinflation, and I dealt with that particular demonstrably false, perversely false, bogeyman earlier. It's not the fiat money that is problematic, it is who is creating and controlling it - as I explained at length, letting banks, led by secretive, greedy, manipulative, dishonest 'investors', control money is a recipe pretty much guaranteeing sustained disaster and ongoing crises. I'll talk about government in a minute.

2. Gold-based money is a good sounding idea, on the surface, a sort of 'eternal' store of value in something scarce and precious that cannot be made worthless by simply turning on a printing press and cranking out billions of pieces of it. And to some extent, no doubt, this idea may have been useful a couple of hundred or thousand years ago, when there were no reasonably stable countries to guarantee a money supply, and no accepted means of reaching agreeable conversion rates between the many currencies being developed, and even the many banks in some countries issuing their own script of various sorts and reliabilities, and everything was in a great deal more flux than today, and the whole idea of 'money' was something that was just being developed, like so many other things. But nowadays walking around pushing to go back to 'gold' as the baseline of all monetary value makes about as much sense as going back to candles to light our houses because electricity generation causes pollution or costs too much or can be unreliable if there is too much demand - these things are true, but we deal with them by going ahead, not backwards.

Consider a few problems:
So we are a prosperous country with a Fort Knox full of gold that is the bedrock of our currency and economy. In a very imaginable scenario today, some clever terrorist sets off a nuclear weapon on the Fort - or some clever thief devises some fiendish plan and steals it all - and then what? Overnight the entire money supply becomes worthless, people cannot go to work or buy things for dinner that night because their gold is no longer available, so their currency is valueless and the whole economy collapses because a few stock traders get panicy? That seems like a pretty insecure basis for a money supply.

And what about a little country like Green Island, with no natural gold - we're supposed to go begging to gold merchants somewhere, and somehow exchange some huge amount of our real property or other goods or services for a few bars of this yellow metal, which really has no particular value, when you think of it, beyond some mystical power that it has become imbued with over the ages - and in effect we allow those who have the gold already to become our bankers because we are extremely heavily indebted to them? Is the value of all our property, built over hundreds of years, or our work on the farms and oceans and office buildings to be deemed as zero because we have no gold? Again, seems pretty senseless and even foolish, when you understand the problems with letting bankers run an economy as I described above. (and what about the country the bankers take the gold from to sell to us? Does their economy become diminished by that amount of gold?)

In general, gold is pretty finite, but human society, at least for now, is growing a lot. Problems.

But those are, to me, still lesser arguments.

To me, the biggest argument for fiat money is simply that this is the only kind of medium of exchange necessary, or possible, in an advanced democracy of intelligent, engaged, honest citizens. An advanced democracy will feature many characteristics, but two of them certainly will be a general trust among the citizens because we are by nature an honest and sharing species, and a very strong, functioning democratic process - and a gold standard signifies just the opposite, a general distrust, and an accepted hierarchical decision making process. It cannot be otherwise. (If you're thinking you already live in a 'real' democracy so we're already doing the best we can, I would beg to differ, quite seriously - as discussed in Ch 4: The Democracy Scam - the fact you have known essentially nothing about this huge money scam I describe here, as perpetrated by 'your' government the last 3 decades, should be clear enough evidence to start with - and there's lots more)

With a 'gold standard', the belief is that we cannot trust 'others', even including 'our' government, to maintain a stable currency, so we need a 'standard' of some sort that is somehow above human interference (we cannot create gold at will as we can, for instance, bank notes, so cannot influence its supply). Also, it is quite undeniable, in a gold-based society, that 'he who has the gold, rules', all talk of 'democracy' being nothing more than theoretical - as your understanding should now show, 'your' government has been working for they who have the gold for the last 30 years, and lying to you about it, as such people do. And then if you think about it, you will also see that both of these precepts are central to capitalism, which is what the banks are all about, of course. Capitalism is all about 'he who has the gold' ruling - and capitalism is also very much about a non-trustworthy, non-sharing, dog-eat-dog society, rather than a society in which trust and honesty and sharing rule - the entire history of capitalism shows that although you may be able to find the odd exception of a hard-working and honest specimen here and there, in general a capitalist makes their fortune through any means possible, as they are really in the power game and the wealth is simply the path to power. The only thing that counts is getting that wealth, as afterwards, well, of course, the winners make the laws and control the policing, and we peasants do as we're told or face consequences. And when one is so lawless oneself, one obviously assumes others to be at least as lawless, so is of course naturally disinclined to trust others, especially in anything to do with money. And when these people run the society, their 'values' of 'getting ahead at any cost' and other dog-eat-dog ideas trickle down to at least some extent, as many people emulate their leaders trying to climb the ladder to success, and many others must do things they might not normally do just to survive.

These imperatives of those who prefer life in a dog-eat-dog, lawless, winner-take-all society, such as we are becoming more and more each day in Canada, should be seen as what they are - problems to be overcome by a society of intelligent, informed individuals who truly wish to live in a democracy, a real democracy run by intelligent, informed people rather than a rich elite pretending to embrace democracy but in reality running everything behind the scenes. And a fundamental condition of a democracy is that we trust the others in our community - yes, there will be the odd untrustworthy sort, but they soon expose themselves and we deal with them, and the basic value of trust remains. The capitalist, on the other hand, starts from the premise that noone can be trusted with 'their' money (since, of course, they could not be trusted with anyone else's), and a solid police presence, restrictive laws, and constant distrust and surveillance of everyone must be the norm.

The great majority of us are honest people, wanting a decent life and willing to do our share of the work to maintain our society. It is only because we have allowed a gang of essentially lawless predators to take over our society, and set the basic norms, that things are as they are (and I do not, of course, mean the elected politicians, many of whom are good enough people, I mean of course the behind-the-scenes 'real' rulers, who contaminate everything with their cancerous dictates - including our 'democracy').

As a community, our strength lies in working together and trusting one another - and this solidarity and trust should be the foundation of our currency as well. Any type of money is only as good as the confidence people place in it, and if we trust ourselves and our neighbors, then we can trust our money. And this applies to a larger political entity as well, for instance a country like Canada, where you can know only a small, small percentage of the people therein personally, but still trust the people overall. We have this today, when you think of it - I can sell my goods in Halifax to somebody, accept Canadian currency in return, and be completely confident that when I travel to Saskatoon and need to buy something, anyone in Saskatoon will accept the money I received in Halifax.

And Canadian money is not backed by gold, but by the trust we have in each other, through our government and through years of stable and honest society.

The 'gold standard' is the capitalist way, the golden rule idea, he who holds the magic talisman, the great sword, the gold - rules!! - rule in the hands of a few. We will not be free in 'our' democracy until we free ourselves from the rule of those who control the gold, and control whatever kind of money we use ourselves. (and if you're wondering about LOTR allegories - so am I - it fits in every way, although Tolkien denied consciously doing such a thing)

The We the People way of true, all-inclusive democracy is to say no - no one person will rule, we all rule together. Our wealth lies not in a few pieces of yellow metal, but in the collective strength we wield together, the trust we have in one another, our ability to work and act together to prevent the few who would be our rulers from gaining that power over us.

The gold standard is a way to allow those who would rule to get the people to accept that the repository of our wealth as a country can be deposited in some small symbol - some small thing that can thus be controlled by a small group of people.

But when We the People rule ourselves, it is because we see that our strength is wide and deep, and no one person or small group of people can claim the right to rule. There is strength in diversity - we all know the old and very true saying about eggs in one basket, anyone familiar with basic biological principles understands that strength lies in diversity.

Very much like democracy itself - if we allow Those Who Would Be King Over All to convince us to place our trust in a few 'representatives', then those who would subvert our society to selfish ends need only control these few representatives - but if we as citizens insist on true democratic participation in all decisions of consequence, then it is almost impossible to so subvert us all, and our democracy will be almost unassailable.

So finally - we forget the idea of bank-created interest-bearing debt as money, and we forget tying our money to gold, whose dangers are much greater than its temptations warrant, and we establish a simple fiat currency (after establishing a real democracy, of course, I didn't say this was going to be easy), in a system carefully overseen by qualified employees truly democratically responsible to We the People, and always closely supervised by us - a money residing mostly in computer accounts as at present, but the great bulk of which is free from encumbrance - no interest to be paid on it every year, just shuffling back and forth between various accounts as we all carry out our daily business.

This will mean some quite large changes in our society - almost every problem we read about in the papers every day these days can be traced back to the change of policy in the 70s and the start of this period of banks creating most of our money and strongly influencing the economy through this, through serious systemic inflation, the creation of bubbles through out-of-control money creation and subsequent crashes, and the various plans to funnel wealth from the bottom to the top, and etc and etc - the problems that are inevitable when a small group of avaricious, manipulative, lying, secretive individuals are allowed to control a nation's money supply.

Without this insatiable demand for interest on the nation's money, and the need to replenish the amount that is transferred into 'investor' accounts each year, the frantic pace of life can slow down for most of us. Those few people who like frantic will be free to be so, but they'll no longer be able to force the majority of us who would rather a calmer pace, with more time to devote to personal things and family, to leap through their endless hoops, working overtime to make more and more for them to steal.

The great economic crises we have been facing regularly these last 30 years will become a thing of the past, as those controlling our money supply no longer encourage such things, thus making our economy much more stable.

The newly married couple who wish to buy a house will find it much easier and cheaper than now - they can still apply for a loan, of course, nobody will be giving them money, but will not need to pay at least the value of the house twice over in interest payments. And if they run into a hard time for some reason, nobody is going to come along and boot them from the house, always a favorite trick of capitalist bankers, but completely uncalled for with one of our own neighbors. In a true democracy, people are cherished, not money.

Our communities will become much greener, as we use our money to support green things such as local organic farms and cooperative businesses, rather than major polluting industries run by international corporations, which capitalist banks of course support, and the capitalist imperative no longer requires the transformation of natural areas into desolation in the name of quarterly growth and meeting endless 'service charges' on money loaned into existence.

Inflation would again become an insignificant background noise, as the basic inflationary driver of paying interest on everything including government 'borrowing' would be gone, as would the goosing inflationary force of banks creating far too much money for speculation and engineered crashes wiping out thousands of little people and transferring their property to winners higher on the financial feeding chain.

Taxes will go down a lot - the whole idea of taxes will need to be rethought, as taxation is basically tribute paid by peasants to a ruler. When we ourselves rule our society democratically, and create the money ourselves that we use for public purposes, and do not have an arrangement to hand over a large percentage of the tax money to banks and major 'investors' each year which then has to be replaced for our own needs, we will be able to do a lot more for 'our' country than we do now, but with a lot less taxation, and a lot less work required on our part to maintain a stable society, rather than re-filling the coffers each year as the money gets sucked into offshore accounts as we must now.

Things like closing public facilities, doctor and hospital shortages, infrastructure neglect and most of the current 'problems' we face in Canada, ALL of which are related to shortages of money which are the direct result of the banks putting in place this great funnel directing tens of billions of our produced wealth/dollars into their offshore bank accounts each year, will also become a thing of the past.

We will be able to start seriously working for world peace, rather than endless war, as no truly democratic government will ever be a warlike government.

- and many, many other things.

There are those that look at things the way they are, and ask why? I dream of things that never were, and ask why not.
- my bro

Fiat tumultus.
IF you thought this essay was useful, and would like to spread it around - please do so. When you read an article about economic things on a website that allows comments, send them here for some explanation about what is really going on.

If you REALLY like it, you could consider buying a hard copy of the whole book, and donating it to your local library, for others to read. You can do that here .

Or you could download a poster for the book and make a few copies and post them around places there might be people who might be interested in this sort of thing to read.

If you want to say something to me about it, you can write me at siamdave at yahoo dot ca (that's ca for Canada, not a misprint)

Refs and stuff
For one of the best descriptions, in a scholarly but very readable presentation, of the history of banks and interest, and what it means to 'we the people', check out The Grip of Death, by an English writer named Michael Rowbotham.

A good place to get a lot more background on the whole subject of monetary reform is the same website Prosperity UK.

A few more Kennedy quotes - you can see why he had to go - NONE of this stuff fits the capitalist dystopia. "...Harry Truman once said there are 14 or 15 million Americans who have the resources to have representatives in Washington to protect their interests, and that the interests of the great mass of other people, the hundred and fifty or sixty million, is the responsibility of the President of the United States. And I propose to fulfill it..." Not for long. Byebye Mr Pres. Bush is more what the capitalists want. And in today's world, what the capitalists want, the capitalists get.

Hyperinflation - check out the list at the end, and look at the dates. Almost all since 1980. Nothing from the 50s or 60s.

Just as I finish this (Feb 22/08), a perfect example - Rescue plan for ailing Toronto - let's sell that property to pay the debts, boys! - and look at the bloody sign - claiming this is a 'blueprint for fiscal stability and economic prosperity'!! - they can't be that stupid, so they have to be lying. And next year when the money is gone??? - well, there'll be more stuff to sell. Selling assets is about the very last resort of a normal person on their last legs financially. And they brag about it.